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Home My WebLink About2003-11-18 City Council (2)City of Palo Alto City Manager’s Report TO:HONORABLE CITY COUNCIL ATTENTION: FINANCE COMMITTEE FROM:CITY MANAGER DEPARTMENT:ADMINISTRATIVE SERVICES DATE: SUBJECT: NOVEMBER 18, 2003 CMR: 498:03 OPTION TO EXTEND THE LEASE AND COVENANT NOT TO DEVELOP AGREEMENT WITH THE PALO ALTO SCHOOL DISTRICT REPORT IN BRIEF Staff requests that the Finance Committee recommend to Council that the City exercise its option for a 10-year extension on the Lease and Covenant Not to Develop (Agreement) with the Palo Alto Unified School District (PAUSD), which will expire December 31, 2004. Under the Agreement as amended, the City provides PAUSD with annual revenue in exchange for 1) the City’s lease for the former Cubberley High School site; 2) a Covenant Not to Develop seven elementary school sites; and 3) an agreement that PAUSD provide space for extended day care at 12 elementary school sites. The terms of the Agreement have resulted in significant benefit for the community since its inception in 1991. The Cubberley Community Center has become a major hub of community participation with more the 900,000 people and 66 organizations using the Cubberley facilities on an annual basis. The Covenant Not to Develop has prevented the PAUSD from selling or developing sites for non School District purposes and has preserved a substantial amount of the City’s remaining open space. The seven covenanted sites provide athletic fields supporting a variety of sporting events for all ages. The Extended Day Childcare program provides space at 12 elementary school sites for City-operated extended day childcare services. Currently, 897 children are accommodated at these sites, which are running near capacity. The Agreement since 1990 has provided the PAUSD with over sixty million dollars, Revenue from the Agreement is now almost equal to 4% of the PAUSD annual budget. CMR:498:03 Page 1 of 6 Extending the Agreement for 10 years will result in cost to the General Fund projected to total $69,077,000 for payments to PAUSD, plus an additional estimated $1,800,000 for maintenance and repairs. Exercising the option to extend the Agreement is consistent with policies and programs in the Comprehensive Plan promoting City-PAUSD collaboration and the effective provision of community services. CMR:498:03 Page 2 of 6 RECOMMENDATION Staff requests that the Finance Committee recommend to Council that the City exercise its option to the 10-year extension on the Lease and Covenant Not to Develop (Agreement) with the Palo Alto Unified School District (PAUSD), which will expire December 31, 2004. BACKGROUND On September 1, 1989, the City and the PAUSD entered into the Agreement. Under the Agreement, the City provided PAUSD with annual revenue in exchange for the City receiving: 1) a lease on the former 35-acre Cubberley High School site, including 180,000 square feet in improvements to be used for community theater, sport and art groups; 2) a Covenant Not to Develop five neighborhood elementary school sites (Jordan, Jane Lathrop Stanford, Ohlone, Garland and Greendell); and 3) an agreement that PAUSD provide space for extended day care at each of eleven remaining elementary school sites. The Agreement was for 15 years, beginning January 1, 1990 and ending on December 31, 2004. There are three options to extend the lease. In the first option, the City has the sole option to extend the Agreement for an additional 10 years. This first option is the focus of this CMR. The second and third options are for two additional five-year terms and require the mutual agreement of both the City and PAUSD. Each year, the payment for the entire agreement is increased by an amount equal to the increase in the consumer price index (CPI). In July 1998, the Agreement was amended (Amendment # 1) to provide for the reopening of one of the covenanted sites (the "old" Ohlone site, now renamed Hoover School) and the substitution of two operating sites, Walter Hays and Juana Briones, for the covenanted site to be reopened. The amendment also provided for the addition of a twelfth extended day care site to be opened at the Hoover School. On January 29, 2001, to accommodate PAUSD’s plans to establish a third middle school at the City-owned former Terman School site, the City and PAUSD jointly approved a conceptual agreement to exchange 7.97 acres at Terman for 7.97 acres at the PAUSD- owned Cubberley site. The property exchange was also a central element in the Four- Party Memorandum of Understanding (MOU) to Address the Middle School Challenge, involving the City, the PAUSD, Jewish Community Center and Stanford University. The Four-Party MOU was approved by the City Council on September 10, 2001. On December 10, 2001, the City Council approved the Terman-Cubberley Property Exchange Agreement with the PAUSD (Lease Amendment #2 and Land Exchange Agreement). The property exchange agreement provided for the City to swap 7.97 acres of City-owned property at Terman to the PAUSD for 7.97 acres of PAUSD-owned property at Cubberley. Its provisions also included the following: 1) a reduction of the City’s lease payments to the PAUSD by an amount equivalent to the City’s lost revenues CMR:498:03 Page 3 of 6 from its lease of the Terman site to the Jewish Community Center ($23,490 per month); 2) joint use of the Terman site fields and special facilities; and 3) reopening of the covenanted Garland School site and the substitution of the Addison and E1 Carmelo school sites within the Covenant Not to Develop. DISCUSSION In the late 80’s, when the Agreement was negotiated, declining enrollment and post- Proposition 13 revenue reductions had placed the PAUSD in financial trouble. School enrollment was down, and the PAUSD was consolidating schools and selling surplus school sites to developers for housing (Attachment A). This produced the necessary funds for the PAUSD, but the City and community became concerned with the increased housing density and the loss of open space and recreational opportunities formerly provided by the neighborhood school sites. The City and PAUSD negotiated the Agreement for the purpose of providing revenue to help assure the continued existence of the City’s excellent school system, while still retaining the open space and recreational facilities for the community. The Agreement currently provides the following community benefits: 1) the Cubberley Community Center with its many and varied community programs; 2) space for extended day care at 12 elementary school sites; 3) the Covenant Not to Develop 7 school sites and 4) continued income for the PAUSD. Cubberley Community Center Since its inception in 1991, the Cubberley Community Center has steadily become a major hub for community participation. In total, more than 900,000 people and 66 organizations use Cubberley facilities on an annual basis - more than all of Palo Alto’s community facilities combined. (See Attachment B for full listing of program providers.) The Cubberley lease program offers affordable rates that attract and keep valuable community assets such as Foothill College, the Jewish Community Center, Palo Alto Adult School, the Cardiac Care program, Friends of the Palo Alto Library, and a variety of day care providers, schools and churches - just to name a few. The room rental program is just as valuable with more than 600 individual rentals a year, including weddings, receptions, parties, church affairs, public meetings, seminars and workshops. Cubberley has also become a focal point for all art disciplines. Groups who rehearse and perform at Cubberley include the E1 Camino Youth Symphony, Palo Alto Chamber Orchestra, Palo Alto Philharmonic, Zohar School of Dance, Dance Visions, and many more. There is also a visual artist colony providing professional artists low cost studios to create their work, while being able to afford to do so in Palo Alto. The Cubberley theatre also provides a rental space for myriad theatre groups who do not have a home stage of their own. CMR:498:03 Page 4 of 6 Sports also take center stage at Cubberley where organized groups and individuals throughout the year play organized soccer, softball, karate, football, table tennis, tennis, Lacrosse, and basketball. Covenant Not to Develop School Sites The Covenant Not to Develop portion of the Agreement was created to "prevent a further burden on the City’s infrastructure and in order to preserve a substantial amount of the City’s remaining open space." The Covenant prevents the District from: 1) subdividing, 2) selling, or 3) developing sites for non-School District purposes for the term of the Agreement. The covenanted sites now include 7 sites (Jordan, Jane Lathrop Stanford, Walter Hayes, Juana Briones, Addison, E1 Carmelo and Greendell). The Greendell site is currently the only covenanted site that is not being used as a school. Through the Covenant, vacant school sites were retained and residents have been greatly served through the continued availability and use of PAUSD-owned athletic fields, supporting a variety of sporting events for all ages. School fields, in addition to programs that are scheduled by PAUSD, are used most frequently by American Youth Soccer Organization (AYSO), California Youth Soccer Association (CYSA), Palo Alto Babe Ruth, Pop Warner, SVSA (adult soccer league), PAASL (adult soccer league), BAWSL (adult soccer league), Little League, girls’ softball, American Legion and the Palo Alto Tomahawks Lacrosse teams. PAUSD athletic fields are used most heavily between the after school hours of 3:30 p.m. and 7 p.m., Monday through Friday. These athletic fields are used by the same organizations on weekends from early morning to dusk. Adults play primarily on Sundays while youth organizations play on both days. The months when the heaviest use occurs are September through November and March through June. AYSO, which has approximately 2,500 participants in the fall, will have thousands of hours of use on elementary and middle school fields. Most recently, the Palo Alto Committee on Athletic Fields has pointed out that Palo Alto does not have adequate athletic fields to meet the identified need. Without the Covenant, this issue would be greatly exacerbated and many of the community teams would be without places to play. Extended Day Childcare Proaram The Agreement as amended provides space at 12 elementary school sites for the purpose of providing City-operated extended day child care services. The City pays PAUSD rent for the sites and in turn subleases them out to day care providers. Ten sites are subleased to Palo Alto Community ChildCare and two others are subleased to two private providers. Over the years, this program has seen steady, continued growth. Eleven of the sites have expanded from one classroom to two, and the one site that has not expanded, CMR:498:03 Page 5 of 6 due to lack of available land, has a waiting list. In total, 897 children can be accommodated at these sites, which are currently running near capacity. Revenue to PAUSD The Agreement provides for significant annual revenue to the PAUSD. Since the lease began in January of 1990, the City has paid PAUSD over sixty million dollars. Revenue from this agreement is now almost equal to 4% of the PAUSD annual budget. RESOURCE IMPACT Extending the Agreement for 10 years will result in costs to the general fund projected to total $.69,077,000 for payments to PAUSD, plus an additional estimated $1,800,000 for maintenance and repairs (See Attachment C). POLICY IMPLICATIONS Exercising the option to extend the Agreement is consistent with policies and programs in the Coanprehensive Plan promoting City-PAUSD collaboration and the effective provision of community services. ENVIRONMENTAL REVIEW Extension or re-negotiation of an existing lease and agreement does not constitute a project for purposes of the California Environmental Quality Act (CEQA). ATTACHMENTS Attachment A: Disposition Status of Surplus School Sites as of January 15, 1987 Attachment B: Cubberley Center Program Providers 2003-04 Attachment C: Lease and Covenant Not To Develop Revenue and Expenses 2003-2013 PREPARED BY: DEPARTMENT HEAD APPROVAL: CITY MANAGER APPROVAL WILLIAM W. FELLMAN Manager, Real Property CARL Services cc:PAUSD Assistant City Manager CMR:498:03 Page 6 of 6 ATTACHMENT A DISPOSTI.OI~ STATUS OF SURPLUS SCHOOL SITES AS OF JANUARY 15, 1987 C l.osHre Oa ~e B i re. Ross Road Fremont Hill s ~6178 Ventura .6¢7~ ?~bberl ey Crescent Park ~oovmr Status Sold FY 84-85 (retail) Sold FY 85-8~ (retail) Leased until 9188 with (3) 5Lyear .op~iomS.t~’r.e~ew-;.iment adjusted at: end. a{ each 5~.Y:e~r period to pre- ~ai?limg-:r.mte:i~or-.similar-properties~ ~P~S~:x~s~mi~ht-:t~ terminate with 1 y~.-_~ri.~.Odzi=m.in-ev,ent site .must be sold.; Les~s~t,:~as.bpti_~u~ purchase; lessee .Reopened to house PAUSD Adult ~ "~ ....PTA wardrobeiSpecial .Ed ~su.ppo t s~arr, Sold~FY 80~81 ~o-Oity of P.A. de~e~ined,@ .r.~apt~re of.-investme~t " v.alue or-.75.~---o~-fair m~rke~ value. ith .Cit-y:;o~ :P ~.A.. effective :Nov. 1981 (20- yea.us) ;;B~se,ire~,~. of ~475,000 pl us Leased .until: 3~me-:~ i;~91 w/opt ions $=4:~-00~0 .(.N) ~!44.~000: ~Y B6187 . $1.M-"F]’. -86 ~87 S236,:,0"~0 F’Y .86187 88187 $4M &181 Ohl.one U~im. PM/A~aszra Lmased until 618,/; 8 lessees; w~ll -:be-.rebid limB7 for ’5 yr term vacant; some:hourly use Of gym + MP; turf and pool le’ased to Ci:ty Sold FY 92-83 (whol esale) to Town o_~ Los A~ltos Hills -sold FY 85-86 (retail) 86/87 S2...~ N = Naylor purchase Revi.sed: II!5187 ATTACHIvIENTB ITenanCs Adolescent Counseling Services FH Artists Studios (2I)E,F,U California Law Revision D2 Children’s International School L1 Children’s Pre-School Center T1 Dance Connection L5 Dance Visions L3 Foothill College Administration I Friends of the PA Library Port Neighbor Montessori -K3 Hua Kuang Chinese Reading Rm H4 Jewish Community Center Port Office of Emergency Services D4 Palo Alto Preparatory School H2 Wildlife Rescue V Youth Community Service D3 Zohar School of Dance L4 Academy of Dance Libre DS African Dance with Wilfred Mark DS Congolese Dance with Regine DS Friday Night Ballroom Dancers Pav L’ecole de Danse DS Mayfield Morris & Sword DS Mystic Sun Mid-Eastern Dance DS Racies de Mexico L6 Red Thistle Dancers DS Rosen Method Movement DS Saturday Night Ballroom Dancers Pav Music El Camino Youth Symphony M4 Music for Children M3 Palo Alto Chamber Orchestra M1 Palo Alto Philharmonic H! Peninsula Barbershop Chorus M2 Peninsula Women’s Chorus M2 Peninsula Piano School M1 I Exerci.~e/Sports AYSO Soccer Field Basketball/Volleyball Camps Gyms California Karate Academy GAR Jazzercise Pav/Gym Keys School Gym Palo Alto Adult Soccer Field Palo Alto Girls Softball Field PACYSA Field Palo Alto Table Tennis Club Gym Palo Alto Tennis Club Courts Palo Alto Tomahawks Lacrosse Field Silicon Valley Soccer League Field Taijiquan Tutelage M4 Traditional Wushu Assocation M4 YMCA Basketball League Gyms IIOther l Acme Education Center A2,3,6,7 BA Amphibian/Reptile Society H1 Chinese Com. Cntr Lunch Prg Kitchen Christ Temple Church Pay First Fijian Assembly of God Pay Grossman Academy A2,3,6,7 Image Film Group H1 Innovative Education Center A2 Kumon Math and Reading A7 Mt. Calvary Baptist Church HI National Traffic Safety InsituteB4 PA Adult School - ESL Testing A3 Senior Friendship Day Aud Software Development Forum H-1 Theater du Coin M2 Vineyard ChristenFellowship Aud